CS Professional · IFSCA - Regulations, Listing and Compliances

Fund Management Services: formula sheet

Full chapter guide

Key formulas

Regulator and statute: IFSCA Act, 2019 → IFSCA → Fund Management Regulations → FME and schemes; Use this chain to open any answer: statute gives power, regulator makes rules, rules bind the entity.
Four building blocks: FME + Scheme + Key persons + Ongoing compliance; Every fund management answer should touch these four heads.
Answer structure: Provision → Facts → Analysis → Conclusion; The written paper rewards this order, with drafting or compliance points added.
Three FME categories: Authorised FME | Registered FME (Non-Retail) | Registered FME (Retail); Know the three labels exactly. Retail is the category linked to schemes offered to the general public and carries the highest bar.
Core entry test: Category + eligibility + fit and proper + KMPs + net worth + fees = grant; Use this as a checklist when answering any case on whether an applicant qualifies.
Net worth rule: Net worth required rises with the category and scope of activity; Quote the exact amount only if you are sure of it from the current regulations. Otherwise state the principle and the schedule.
Activity limit rule: No FME may manage a scheme outside the permission of its category; A lower category cannot take up activity reserved for a higher one without moving up.
Core rule on people: Authorisation or registration of FME = adequate capital + systems + qualified principal officer, compliance officer and KMP; The people requirement is a condition of getting and keeping the status, not a one-time formality.
Fit and proper test: Eligible person = integrity + competence + financial soundness + no disqualifying record; Apply it to the FME, its principal officer, compliance officer and KMP. Use the IFSCA fit and proper criteria as given in the Regulations.
Principal officer: Principal officer = senior accountable person + prescribed qualification + prescribed experience; Quote the minimum qualification and years of experience exactly from the current Regulations in the exam.
Compliance officer: Compliance officer = monitor + report + advise + stay independent of investment decisions; Independence is the point most often tested. State who the officer reports to and the duty to report violations to IFSCA.
Replacement of KMP: Vacancy or change in KMP → fill with eligible person + inform IFSCA as prescribed; Check the time limit in the Regulations before quoting any number of days.
Investor test: Public or small investors → retail scheme | Accredited or large-ticket investors → restricted scheme; This is the first filter in any question. Retail means stricter rules.
Venture capital scheme test: Restricted scheme + early-stage, unlisted, high-growth investee + usually closed-ended → venture capital scheme; It is a type of restricted scheme. The investment focus decides the label, not the size of the fund. Restricted-scheme investor and placement conditions still apply.
Family investment fund test: Restricted scheme + single family as investors + run by a fund management entity → FIF; Check who the investors are and whether they are related as one family, as the regulations define. Then apply the FIF conditions, such as minimum corpus and investor limit.
Corpus and investor limits: Minimum corpus + minimum investment per investor + maximum number of investors, as set for each scheme type; Quote the figures from the current regulation text. If a question gives the figures, use them.
Accredited investor: Individual or entity meeting the prescribed net worth or income thresholds; Accredited investors are usually exempt from the minimum per-investor ticket that applies to others in restricted schemes.
Net Asset Value (NAV): NAV = Fair value of scheme assets − Liabilities (including accrued expenses); Assets include investments, cash and accrued income. Use fair value as per the valuation policy, not cost.
NAV per unit: NAV per unit = NAV ÷ Number of units outstanding; Units are issued and redeemed at this price (plus or minus any permitted load or fee).
Exposure to a single issuer: Exposure % = Value of investment in the issuer ÷ NAV × 100; Compare with the limit applicable to that scheme type. Calculate on NAV, not on the amount invested originally.
Leverage ratio: Leverage = Gross exposure ÷ NAV; Gross exposure includes borrowed money and derivative positions. A ratio above 1 means the scheme is leveraged. Check the cap and disclosure rule for the scheme type.
Core compliance rule: Invest as per scheme documents + stay within diversification and leverage limits + value fairly under a written policy + disclose; Use this four-part structure as the skeleton of any answer.
Four-layer compliance map: Conduct + Disclosure (placement memorandum) + Audit + Reporting to IFSCA, backed by Inspection and Penalty; Use this as a checklist for any case question. Test each layer against the facts given.
Placement memorandum rule: Offer document must be true, adequate, and updated for material changes; A material omission or misleading statement is a breach even if no investor has yet suffered a loss.
Accountability rule: FME is responsible for compliance; Compliance Officer monitors and reports; Appointing a Compliance Officer does not remove the FME's own liability.
Enforcement ladder: Inspection → show-cause notice and hearing → direction / penalty / suspension or cancellation; Name the steps in order. Do not jump to cancellation without notice and hearing.

Quick revision

The IFSCA is the regulator for fund management in the IFSC, and the IFSCA (Fund Management) Regulations, 2022 are the main source.
A fund management entity must be authorised or registered, depending on its category, before it manages funds.
Know each entity category and what it is permitted to manage; do not treat them as interchangeable.
A fund management entity must have the key managerial personnel the Regulations require and a compliance officer.
The compliance officer is responsible for monitoring compliance and reporting issues; know the qualification and role conditions.
Restricted schemes are meant for a limited class of investors, while retail schemes are open to the general investor and carry stricter conditions.
Venture capital schemes have their own category with specific investment focus and conditions.
Investment conditions and restrictions differ by scheme type; always identify the scheme first.
Valuation must follow the method and frequency the Regulations and the scheme documents require.
Continuing obligations include periodic reporting to IFSCA and disclosure to investors; track due dates.
Answer cases in order: provision, facts, conclusion, then the practical compliance step.
Verify thresholds and limits in the current text before quoting any figure.

Common mistakes

Saying SEBI regulates funds set up in GIFT City IFSC. Fix: Anchor on the IFSCA Act, 2019. For IFSC activity, IFSCA is the primary regulator and its regulations apply.
Treating the fund and the fund manager as the same thing. Fix: Define them separately. The manager is the entity authorised to run the business; the fund or scheme is the pool of investor money.
Mixing up the three categories or using the old two-way split of authorised and registered only. Fix: Always write all three labels together and link retail to schemes for the general public.
Quoting exact net worth or fee figures from memory. Fix: Quote a figure only if you are sure it is current. Otherwise state that net worth rises with category and is as specified in the regulations.
Treating the compliance officer as part of the investment team Fix: Stress independence. The compliance officer must be able to challenge investment decisions, so flag any clash of roles in your answer.
Quoting experience or qualification figures from memory Fix: State the principle and quote a figure only when you are sure of it from the current Regulations text. Never import SEBI numbers.
Treating a restricted scheme as open to any investor. Fix: Write that a restricted scheme is privately placed to accredited or large-ticket investors only, with a cap on investors.
Calling a scheme venture capital because it is large or risky. Fix: Define it by investment focus: early-stage, unlisted, high-growth businesses, normally closed-ended. Add that it is a type of restricted scheme, so the restricted-scheme investor and placement conditions apply.
Applying one set of limits to all scheme types. Fix: Always name the scheme type first. Say that restricted schemes for accredited investors have more flexibility than retail schemes, and check the Regulations for the exact limit.
Calculating exposure on the original amount raised instead of current NAV. Fix: Use current NAV as the denominator. Limits are tested against the scheme's current value.

Exam tips

Open every answer with the chain: IFSCA Act, 2019, IFSCA, regulations, entity. It earns early marks.
Use short headings in your own answer such as provision, analysis and conclusion, as the paper is case-based.
Since electives are open book, mark the regulation definitions and authorisation conditions in your text so you can find them fast. Do not copy them word for word.
Do not memorise section numbers you are unsure of. A correct plain-words rule scores better than a wrong number.
Always end with practical compliance points: authorisation, key persons, valuation and reporting.
Open every answer with the category, because marks follow the correct classification.
Do not invent figures. If unsure of an amount, state the principle and refer to the schedule of the regulations.
Use a short list for eligibility conditions. Examiners reward complete and orderly coverage.